House passes bill to hike the federal minimum wage to $15 per hour • Hacker News Board

Re: House passes bill to hike the federal minimum wage to $15 per hour

#11

Post by mac01021 » Sun, Jul 21, 2019, 4:29 PM UTC

Liron wrote: post #5

luxuryballs wrote: post #3

Effectively banning/exporting any jobs that aren’t productive enough to be worth paying as much. Price fixing always creates shortages and is an inefficient way of allocating resources. Less people will be hired, businesses will go under. Stupid idea and should be a constitutional violation, you should have the right to work for whatever wage you want.

Right, plus there are plenty of Americans who want to work for say $13/hr if the job is a rewarding one. The current federal minimum wage of $7.25 is arguably low enough to raise somewhat because why not, but $15/hr is clearly high relative to the current supply/demand equilibrium.

They can still work for less as a contractor, if they want, right?

Re: House passes bill to hike the federal minimum wage to $15 per hour

#12

Post by rjf72 » Sun, Jul 21, 2019, 5:11 PM UTC

rayiner wrote: post #9

exabrial wrote: post #7

I'm starting to miss the days when people are buying votes with their own money instead of other people's money. /s I hope Congress also doubles all pour savings as well, because the purchasing power of those is about to be diminished.

The purchasing power angle makes no sense. Purchasing power will only be diminished if you increase the total money supply. Minimum wage won’t do that.

Bloomberg ran a nice piece on what it's like to own a McDonald's franchise here [1]. The raw numbers sound nice - $2.7 million gross, $1.8 million in gross profit. But after your various expenses come into play, the honeymoon ends - you end up taking home about $150k for a mountain of work that's required to keep a franchise running in good shape. You're buying a job.

The reason this matters is because those numbers are is pretty representative of many regular businesses; well outside 'our' world of VC driven mutual lotteries. You're taking home $150k yourself, but you're paying $540k in crew (non-managerial) payroll. And many of these guys are at or near minimum wage. Increase their wages just 30% (and going from $7.25 to $15 is a > 100% increase) would cost you $162k. And now you're losing money. And McDonalds are pretty primo in terms of profit. Life's often much harder for for the countless no-name businesses out there.

It's the really counter intuitive nature of business. A company can make millions, yet have owner(s) that are, out of necessity, living relatively modestly. So imagine your labor costs skyrocket. What do you do? You really don't have any options. You increase prices or you go out of business.

This seems likely to have a paradoxical effect. It means company with large profit margins are fine, but you squeeze the very low profit margin companies. And the low profit margins companies tend to have low profit margins because they're providing products at extremely cost to cost. E.g. company selling $50 steaks = no problem. Company selling $1 tacos = problem. So the very businesses who are doing to their most to cater to lower income people end up being the most negatively affected. Of course now their customers can afford to pay more, but that's precisely the definition of a reduction in a purchasing power per dollar.

[1] - https://www.bloomberg.com/features/2015-mcdonalds-franchises...

Re: House passes bill to hike the federal minimum wage to $15 per hour

#13

Post by clairity » Sun, Jul 21, 2019, 5:44 PM UTC

rjf72 wrote: post #12

rayiner wrote: post #9

Earlier quoted context omitted.

The purchasing power angle makes no sense. Purchasing power will only be diminished if you increase the total money supply. Minimum wage won’t do that.

Bloomberg ran a nice piece on what it's like to own a McDonald's franchise here [1]. The raw numbers sound nice - $2.7 million gross, $1.8 million in gross profit. But after your various expenses come into play, the honeymoon ends - you end up taking home about $150k for a mountain of work that's required to keep a franchise running in good shape. You're buying a job. The reason this matters is because those numbers…

you make it sound so bad to own a mcd's franchise, but most people would be ecstatic at the chance. $150k roughly puts you in the top 10% by individual income. most people are quite happy working hard for that amount of money.

and raising prices as a result would be fine since other minimum wage earners (i.e., customers) would now have more money to spend on fast food. (estimating based on your numbers, prices would have to increase about 10%)

Re: House passes bill to hike the federal minimum wage to $15 per hour

#14

Post by desdiv » Sun, Jul 21, 2019, 6:02 PM UTC

mac01021 wrote: post #11

Liron wrote: post #5

Earlier quoted context omitted.

Right, plus there are plenty of Americans who want to work for say $13/hr if the job is a rewarding one. The current federal minimum wage of $7.25 is arguably low enough to raise somewhat because why not, but $15/hr is clearly high relative to the current supply/demand equilibrium.

They can still work for less as a contractor, if they want, right?

Whether someone is an employee vs a contractor solely depends on the "economic reality" of their job. Neither the employer nor the employee can choose to have it classified as a contractor relationship if it isn't actually one.

For example, if Subway determines how, where, and when I make the sandwiches, and provides all the equipment and materials, then I am a de facto employee. Even if both Subway and myself voluntarily agrees that I am a contractor for whatever reason (sidestepping minimum wage laws in this case), and signs a service contract to that effect, I am still treated as an employee under the Fair Labor Standards Act.

[0] https://www.dol.gov/whd/workers/Misclassification/misclassif...

[1] https://www.dol.gov/whd/regs/compliance/whdfs13.htm

Re: House passes bill to hike the federal minimum wage to $15 per hour

#15

Post by rightbyte » Sun, Jul 21, 2019, 6:11 PM UTC

rjf72 wrote: post #12

rayiner wrote: post #9

Earlier quoted context omitted.

The purchasing power angle makes no sense. Purchasing power will only be diminished if you increase the total money supply. Minimum wage won’t do that.

Bloomberg ran a nice piece on what it's like to own a McDonald's franchise here [1]. The raw numbers sound nice - $2.7 million gross, $1.8 million in gross profit. But after your various expenses come into play, the honeymoon ends - you end up taking home about $150k for a mountain of work that's required to keep a franchise running in good shape. You're buying a job. The reason this matters is because those numbers…

If the minimum wage increased fast food joints would, as you note, just have to raise their prices. There is McDonalds in Norway and Switzerland too.

I find it quite disturbing that McDonalds prices are about the same in SF as else where. There is no way that is working out for the employees. If people want to live there they would have to be prepared to pay not just for their own housing ...

Of course, some businesses would not be profitable at raised prices.

Re: House passes bill to hike the federal minimum wage to $15 per hour

#16

Post by syshum » Sun, Jul 21, 2019, 6:17 PM UTC

Liron wrote: post #5

luxuryballs wrote: post #3

Effectively banning/exporting any jobs that aren’t productive enough to be worth paying as much. Price fixing always creates shortages and is an inefficient way of allocating resources. Less people will be hired, businesses will go under. Stupid idea and should be a constitutional violation, you should have the right to work for whatever wage you want.

Right, plus there are plenty of Americans who want to work for say $13/hr if the job is a rewarding one. The current federal minimum wage of $7.25 is arguably low enough to raise somewhat because why not, but $15/hr is clearly high relative to the current supply/demand equilibrium.

It seems market forces are already working to do that with out the need for government intervention.

Many Companies (walmart, Amazon, Target, etc) have all raised their companies minimum starting wage to well above the federal minimum, some even to $15

This is correct way for wages to raise, not by government demand

Re: House passes bill to hike the federal minimum wage to $15 per hour

#17

Post by joey_bob » Sun, Jul 21, 2019, 6:18 PM UTC

How might a $15 minimum wage might affect the current (engineering) internship system? Almost every non-software engineer I know earned $15, or marginally more, during undergraduate for internships related to their field. If minimum wage jobs are price-competitive with an internship, what is the impact? Will large employers of engineers raise internship pay? Will they continue to hire as many interns?

Re: House passes bill to hike the federal minimum wage to $15 per hour

#18

Post by gwright » Sun, Jul 21, 2019, 7:06 PM UTC

rightbyte wrote: post #15

rjf72 wrote: post #12

Earlier quoted context omitted.

Bloomberg ran a nice piece on what it's like to own a McDonald's franchise here [1]. The raw numbers sound nice - $2.7 million gross, $1.8 million in gross profit. But after your various expenses come into play, the honeymoon ends - you end up taking home about $150k for a mountain of work that's required to keep a franchise running in good shape. You're buying a job. The reason this matters is because those numbers…

If the minimum wage increased fast food joints would, as you note, just have to raise their prices. There is McDonalds in Norway and Switzerland too. I find it quite disturbing that McDonalds prices are about the same in SF as else where. There is no way that is working out for the employees. If people want to live there they would have to be prepared to pay not just for their own housing ... Of course, some business…

> Of course, some businesses would not be profitable at raised prices.

It is hard to tell from your comment, but you see that as a problem, right?

I agree that some people will benefit from an increased federal minimum wage, but I don't understand how the negative aspects can be dismissed:

    * some people will be unemployable at $15/hour
    * some business models will be unworkable at $15/hour
    * some people will lose jobs as headcount is reduced
    * some people will lose jobs as businesses fail
    * some businesses will be less profitable
    * $15/hour ignores geographic cost of living differences
    * consumers will pay more for good/services

In a free market, all these competing problems are resolved through millions of independent decisions by business owners, employees, and consumers for their particular situation. The idea that a bunch of politicians have magically come upon a single hourly wage that is optimal for all these situations is just non-sensical to me.

Re: House passes bill to hike the federal minimum wage to $15 per hour

#19

Post by gwright » Sun, Jul 21, 2019, 7:14 PM UTC

clairity wrote: post #13

rjf72 wrote: post #12

Earlier quoted context omitted.

Bloomberg ran a nice piece on what it's like to own a McDonald's franchise here [1]. The raw numbers sound nice - $2.7 million gross, $1.8 million in gross profit. But after your various expenses come into play, the honeymoon ends - you end up taking home about $150k for a mountain of work that's required to keep a franchise running in good shape. You're buying a job. The reason this matters is because those numbers…

you make it sound so bad to own a mcd's franchise, but most people would be ecstatic at the chance. $150k roughly puts you in the top 10% by individual income. most people are quite happy working hard for that amount of money. and raising prices as a result would be fine since other minimum wage earners (i.e., customers) would now have more money to spend on fast food. (estimating based on your numbers, prices would…

> and raising prices as a result would be fine since other minimum wage earners (i.e., customers) would now have more money to spend on fast food. (estimating based on your numbers, prices would have to increase about 10%)

And what about the customers that aren't minimum wage earners and don't have more money to spend? And what about the formally minimum wage workers who no longer have a job or have fewer hours (reduced total wages) because the business cut head count and/or reduced hours? Just because the minimum wage is increased doesn't mean that it makes business sense to keep the same headcount/hours at the increased wage.

Re: House passes bill to hike the federal minimum wage to $15 per hour

#20

Post by gwright » Sun, Jul 21, 2019, 7:19 PM UTC

joey_bob wrote: post #17

How might a $15 minimum wage might affect the current (engineering) internship system? Almost every non-software engineer I know earned $15, or marginally more, during undergraduate for internships related to their field. If minimum wage jobs are price-competitive with an internship, what is the impact? Will large employers of engineers raise internship pay? Will they continue to hire as many interns?

I don't think engineering internships are price-competitive with minimum wage jobs. So I wouldn't expect any direct impact.

Perhaps an indirect impact though, especially if the company overall is dependent on minimum wage labor in other areas (i.e. the business is less profitable and so overall budgets change to address the changed business model). So that might show up as 1 intern vs. 2, for example. Another example of how an increased minimum wage might reduce overall job openings.